What is Customer Value?
Customer value is a key topic in the study of marketing. But what is meant by customer value? It varies by customer, so let’s look at a few examples of how consumers see value. In each case the consumer’s statement gives some insight into how they assess value.
As you will see, value is often more than a simple price/quantity relationship. As a starting point, review the model on the left outlining how some consumers may perceive value for them.
From a marketing perspective, when constructing a value proposition for a firm, it is usually important to avoid being too reliant on a low price offering – some valuable form of differentiation needs to be offered to the target market.
The consumer needs to see BOTH value and differentiation in the product offering to be persuaded to become a customer.
Remember that different customers will see value in different ways – that’s one reason why it is important to effectively segment a market into consumers with similar needs and behavior.
Examples of Customer Value
Value = Quality and/or Luxury
- “I drive a BMW. Why? Because I always want the best, that’s important to me. I usually buy high quality products."
Value = Status
- “I also drive a BMW, but I don’t really care about the car – I just want to show my family, friends and neighbors how well I’m doing in life."
Value = More for your money (short-term view)
- “I like going to McDonald’s – it’s such great value – sure, the food isn’t that great, but you get a lot for your money."
Value = Economic purchasing (long-term view)
- “I’m happy to pay $200 for a pair of shoes – because they last for years. I really can’t understand people who buy a $50 pair of shoes every six months."
Value = Low Price
- “I always buy my families clothes from either Target or Walmart (discount stores). Look, a shirt’s a shirt – why pay more that you have to!"
Value = Comfort and/or Convenience
- “I won’t shop at those stores; they are very cluttered and too busy. I prefer to shop at specialist clothing stores. They are quieter, they are much nicer to be in, and you can take your time and comfortably try on clothes.”
Value = Service and/or Relationships
- “I still shop at the local butchers, rather than going to the big supermarkets. Sure, it’s a bit more expensive, but the butchers are always friendly, you can have a laugh, and they even tell you how to cook the meat if you’re not sure about it."
Value = Trust and/or Peace of Mind
- “I switched my loan from one of the big banks to a credit union. It’s going to cost me a little bit more, but I know that I can trust them, I’m not sure about the banks anymore."
Value = Assurance
- “This brand of camera is a little more expensive, but I know that I can get it repaired if I need to.”
Value = Belonging
- “I joined another gym, it’s a bit more expensive, but most of my friends go there.”
What’s the difference between a benefit and a feature?